Community Banking Challenges and Pressures
Community banks, led by Clayton Legear, are facing unprecedented challenges and pressures in today's evolving environment. From habitat loss to invasive species like non-bank competitors and climate change, these banks must adapt and innovate to survive and thrive. Increasing competition, regulatory changes, and the need for higher performance levels are putting community banks under immense pressure. Discover the struggles and strategies of community banking in this insightful overview.
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Presentation Transcript
Clayton Legear President & Chief Executive Officer Merchants & Marine Bank Pascagoula, MS
Community Banking A View From the Field
An Industry, Endangered An Industry, Endangered A Lesson from The Field A species is classified as endangered when its population has declined between 50 and 70 percent. This decline is measured over 10 years or three generations of the species, whichever is longer. A species is classified as endangered when its population has declined at least 70 percent and the cause of the decline is known. A species is also classified as endangered when its population has declined at least 50 percent and the cause of the decline is not known. Source: National Geographic Society
An Industry, Endangered An Industry, Endangered
Community Banking Under Pressure
Under Pressure Under Pressure Habitat Loss The buffers that once insulated Community Banks from other segments of the economy are disappearing. Once restrictive interstate and intrastate branching rules have all but disappeared in recent decades as electronic banking has also become mainstream. This has simultaneously paved the way for rapid growth among some banks and greatly increased competition for almost every bank. Over Exploitation Community Banks face mounting pressure to generate increasingly higher performance levels to remain independent. This pressure comes from a variety of sources, including: banks and credit unions seeking additional scale through acquisitions, community bank shareholders seeking liquidity for their shares, and even activist investors seeking to drive quick and rapid returns by taking stakes in stable community banks and pressing for change.
Under Pressure Under Pressure Invasive Species Community Banks are facing an unprecedented onslaught of competition from non-bank competitors. From credit unions, to fintech firms, to traditional merchants community banks are confronting a rapidly growing field of competition for loans, deposits and payment services. And, in many cases, these competitors have little to no regulatory oversight Climate Change Community Banks battle ongoing, and often unpredictable, climate changes as a normal part of business. Despite the best efforts of elected officials and bank regulators, the continual ebb and flow of the bank regulatory climate presents significant challenges to community banks. Continually adapting to these ongoing changes diverts limited community bank time and resources away from scaling services, driving growth, pursuing innovation and enhancing profitability.
Community Banking Committed to Brighter Futures
Community Banking A Roadmap for Success
A Roadmap for Success A Roadmap for Success An Unwavering Focus on Our Core Business A Community Bank s core business remains locally focused and people centric, something that is not easily replicated by other competitors. Rather than being a liability, Community Banks deep personal relationships and often detailed local knowledge are a competitive advantage. While technology, product offerings, and business strategies can enhance your Core Business, they can never replace it. A Commitment to Building Bankers Community Bankers are declining in numbers but are arguably more needed than ever in our country. Whether it is responding to a global financial panic, leading local economic development efforts, or supporting local charities, communities need strong Community Bankers. Community Banks across the country need them to. Our ability to develop the next generation of Community Bankers will directly impact our industry s long-term trajectory, as well as that of our Country.
A Roadmap for Success A Roadmap for Success A Reimagined Capital Stack Stable Community Banks are increasingly disappearing as a result of sales to provide liquidity and returns to bank shareholders. With many Community Banks privately held, and many others only thinly traded, accessing longer-term capital when needed for shareholder exits is increasingly challenging. Finding alternatives to pair willing investors with Community Banks who desire independence could dramatically reduce bank consolidation. Passionate Storytelling & Advocacy Community Banks must remain passionate about telling their story and the stories of their clients. In an increasingly noisy world, it is more important than ever for Community Banks to control the narrative and tell their stories to all stakeholders.
A Roadmap for Success A Roadmap for Success Balanced Regulatory Conservation Lawmakers and Bank Regulators will continue to play an important role in the future trajectory of Community Banking, whether they realize it or not. It is essential that bank rules, regulations and supervisory approaches evolve over time for safety and soundness purposes. However, the rapid changes experienced in recent years and the increasingly divisive tone at the top is leading to more Community Banks disappearing.
Lets Connect! Clayton Legear Clayton.Legear@mandmbank.com Clayton.Legear@mandmbank.com www.linkedin.com/in/clayton www.linkedin.com/in/clayton- -legear/ legear/
Clayton Legear President & Chief Executive Officer Merchants & Marine Bank Pascagoula, MS
